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AOL Hires Away Merrill's Former CTO

America Online , on the cusp of releasing an ambitious new upgrade of its service later this summer, has hired the former chief technology officer at Merrill Lynch and GE Capital to help lead the charge with the ISP's technology strategies.

As new CTO for AOL, John McKinley is expected to direct the ISP's technology agenda in a number of areas, including broadband, wireless and premium services, the company said.

AOL Vice Chairman Joe Ripp said in addition to technology strategy, McKinley will oversee the teams in charge of product engineering, network infrastructure and data centers, and internal business systems and computing.

The appointment comes on the heels of AOL Time Warner's second quarter earnings, in which AOL revealed that it lost 846,000 subscribers during the quarter, more than 500,000 more than Wall Street was expecting. But while the company helped stem the impact of the subscriber losses with a 5 percent reduction in expenses, the subscriber numbers hung over the parent company's results Wednesday.

In the meantime, AOL is readying its latest client, AOL 9.0 Optimized, which company executives have called the most ambitious upgrade in the history of AOL. Among its new features are improved e-mail and messaging options, improved anti-virus and firewall services for broadband users, new parental controls and more exclusive content.

Before joining AOL, McKinley was executive vice president and head of global technology & services for Merrill Lynch. During his five-year tenure, he oversaw a 14,000-strong technology and operations organization and helped spearhead the investment bank's online trading offerings (ML Direct and Merrill Lynch Online).

Prior to joining Merrill Lynch in 1998, he was senior vice president, CTO and information officer for GE Capital Corporation. While there, he oversaw a division of 3,600 employees, which implemented much of the financial services company's e-commerce efforts. His career also includes a stint as a partner with consultancy Ernst & Young until 1995. He's a graduate of the Wharton School of Business at the University of Pennsylvania.

AOL executives said they were keen to bring on a strategic thinker, who "has helped some of the largest companies in the world implement ambitious technological efforts while maintaining strong fiscal discipline."

The appointment of McKinley could signal how high the stakes are for AOL going forward to manage the erosion of its dial-up base as customers switch to broadband, and to entice new broadband subscribers to both its "bring your own access" $14.95-a-month version of 9.0 and the full-price $50-$55 monthly version including a broadband connection.